Managed services spell big IT Business

Peerzada Abrar, Bangalore, July 27, 2009
The Economic Times
As global recessionary pressures increase, enterprises are looking at ways to capitalise their existing IT infrastructure, with many of them adopting the managed services business model.

Telecom IT companies such as products company Subex and Netmagic Solutions, an IT services provider that count on customers such as AT&T, BT and Vodafone, have adopted this model.

Subex is going to change its business strategy for the next five years by focusing more on managed services rather than follow the old licence-fee model. “Telecos are now demanding that they share risks with their product companies,” Subex founder chairman, managing director and chief executive Subash Menon said.

“People will ask for platform and managed services by the next decade. Telecom players want to have platforms and not point solutions.”

Subex has gained 24 customers in managed services, including BT and a few customers from the US, and is bidding for large contracts with telcos, which will adopt the managed route rather than licence sale.

“We achieved 11 percent of our revenue from managed services, which was zero three years back,” Menon said. He added that the acquisition of Azure has given them domain and operational expertise to create a managed services platform.

Insight Research predicts that revenue associated with the managed services market will grow from $30 billion in 2008 to nearly $43 billion by 2013. Netmagic Solutions, which clocked growth of over 50 percent last year, expects a growth of 70 percent for the financial year 2009-2010.

Netmagic, which has a virtual data centre in the US has launched cloud computing in addition to its managed services. “Our cloud-computing services help companies cut costs by 25-30 percent and now 95 percent of our customers have some element of managed services,” Netmagic chief executive and managing director Sharad Sanghi said.

IDC expects global spending on IT cloud services alone to grow almost threefold in the next five years, touching $42 billion by 2012. “We allow customers freedom to focus on their core competency. Service providers have realised that the managed services improves their margins. Managed services is already in place in the US and now the trend is picking up in India,” Sanghi said.

Netmagic, which has 350 employees, is looking to employ 500 employees in the next six months and build data centres in Chennai and Delhi.